Question

The Procter & Gamble institution have major financial statements to file and report. For one, they have many divisions that would make significant tasks for their accounting departments to quantify. I want to focus on the part of the qualitative information reported in the financial statement. How would you determine what the qualitative information that needs inclusion in the report?

Answer 1

Following qualitative information that needs inclusion in the report are;

1)Relevance

-it refers how helpful the information is for financial decision making processses.

A:Confirmatory Value

provides information about past events.

B:Predictive value

provides predictive power regarding possible future events.

2)Representational Faithfulness

-also known as reliability.

-for accounting information to possess representational faithulness, it must be,

A:COMPLETE

-financial statement should not exclude any transaction.

B:NEUTRAL

-the degree to which information is free from bias.

C:FREE FROM ERROR

-the degree to which information is free from error.

3)Verifiability

-Verifiability is the extent to which information is reproducible given the same data and assumptions.

4)Timeliness

-Timeliness is how quickly information is available to users of accounting information.The less timely the less useful information is for decision making.

5)Understandability

-Understandability is the degree to which information is understood.

6)Comparability

-It is the degree to which accounting standerds and policies are consistently applied from one period o another.

-Financial statements that are comparable, with consistent accounting standards and policies applied throughout each accounting period, enable users to draw insightful conclusions about the trends and performance of the company over time.